Spotify won't stop the music

Remember how the internet was going to kill music? Seriously. And before that home taping, the arrival of the radio, and the invention of the record player.

Each was going to cut the return for making music. As a result, we would be surrounded by less of it. Seriously. At home I have a copy of a 1990s CD entitled "Don't stop the Music". The Australian record industry sent it around to warn that Australian music would vanish if the government allowed the unregulated import of CDs, which it did. The record player was going to cut sales of sheet music, putting composers out of business. Radio was going to cut sales of records, putting recording artists out of business. Home taping was going to cut multiple sales of records, meaning that artists would no longer find it worth their while to record. And the internet was going to cut payments to artists altogether.

The Spotify streaming service offers access to a library of more than 20 million songs.

Now there's streaming radio. It charges two prices: nothing (backed up by advertising), and very little. It pays the recording companies just 0.7 US cents per play. The artists and composers get a fraction of it.

Yet all these years on we are still surrounded by music. It follows us throughout a day from our bedside to our commutes to our earphones at work to our drive home to settling into bed.

There is no doubt that recording companies are making less money since file sharing, he says. But that doesn't necessarily mean they are making less music, or even less good music.

Assembling data on the quality of songs from the "all-time best" lists compiled each year by Rolling Stone and other magazines he finds that the albums regarded as good tend to be recent, and increasingly so as the internet age wears on.

The good new ones aren't even by old artists. He says around half of the good new albums are by artists who only started recording since file sharing. It has neither killed new music, nor frightened people away from beginning to make music.

But it is killing albums. The biggest revolution wrought by the internet wasn't illegal downloading (it's diminishing rather than growing), it was the ability to buy tracks one at a time.

Most albums are filled with fillers. After the standout tracks (the ones the producers put an effort into) the rest are close to junk, the kind of tracks that wouldn't be bought unless they were bundled onto albums.

While it has always been possible to buy individual tracks in the form of singles, they used to be inconvenient to play. Who wanted to change a CD every few minutes? Now that it's easy to play hours of single tracks without interruption, there's no longer much reason to buy albums.

We are no longer buying what we don't want, and increasingly, we are no longer buying at all. Pandora, Spotify and similar services allow us to pay just to listen. So they've become the next big threat. At the annual general meeting of the American Economic Association last week Waldfogel previewed a new paper he has written examining whether they boost or harm sales.

It's quite clear they boost the sales of particular tracks. When Pandora tried playing some tracks in some regions and not others the sales of the tracks increased in the locations where they were played. It's what happens with radio and it's why artists are keen to get airplay. But that doesn't mean that Pandora itself boosts sales. Without Pandora and Spotify, would music sales in general be higher?

His answer is yes, but not by much, and it's not the end of the story. Every 137 streamed tracks appear to cut legitimate sales by one track (and to cut illegitimate downloads by much more).

That lost sale is a cost to the record company. It misses out on the 82 US cents it would have got from a retailer such as iTunes. In return it gets 0.7 US cents per play. Multiplied by 137 that gives it 95.9 cents in return for losing 82 US cents, putting it slightly ahead.

So please don't feel guilty listening to music at work. It isn't going to stop.